WHAT TO BUY
NEW HOMES
A builder is more likely to be flexible on price at the very beginning of a project, when he wants to move people in quickly and at the end of a project when only a few units are left. If you cannot negotiate on price, negotiate for a better lot location or amenities, such as a carpet upgrade or light fixtures.
Hiring a home inspector for a new home
Always hire an inspector, even if the home is new. The inspector should either be a professional home inspector, an engineer, an architect or a contractor. Look for someone who belongs to a home inspection trade organization, such as the American Society of Home Inspectors (ASHI) because they have formal inspection guidelines and a professional code of ethics for its members and field experience and technical knowledge about structures and their various systems and appliances are required.
Many builders often have their own mortgage brokerage subsidiaries, or refer buyers to "preferred" local lenders. If it is a buyer's market in your area, developers will offer incentives such as low-down-payment financing or interest rate subsidies.
Find an inspector | ASHI, American Society of Home Inspectors |
FIXER-UPPERS Fixer-uppers have lower market value than other houses in the immediate area because they have not being well maintained or they were completely abandoned. To find out if is a good investment you will need to determine what the average home in the area sells for. It is recommended to invest in a property that only needs minor cosmetic work - paint, new flooring and window coverings, landscaping, and new appliances.
Determining the value of a distressed property
A comparable market analyses shows you the price that similar properties have sold for in the past and find out the listing price of others currently on the market. Examine the fixer-upper and determine how much it will cost for the repairs, then decide if the expense needed to repair the property is within your budget.
The return expected from home improvements will vary depending on the type of work that is done. The highest remodeling paybacks have come from siding and window replacements, major kitchen remodeling, bathroom and family room additions, and mid-range master bedroom suites. An important point to remember is that remodeling not only improves a home's livability, it also enhances its curb appeal with future buyers.
FORECLOSURES A lender can repossess a property when the homeowner fails to pay the mortgage. Thousands of homes end up in foreclosure when the owners lose their homes due credit problems, divorce, unexpected expenses, loss of a job, failure to pay property taxes and during periods of economic instability.
Finding foreclosure properties
Look in the legal notices section of your local newspaper. A notice is also usually posted on the property itself and somewhere in the city where the sale will take place. Real estate agents and the bank or financial institution that holds the mortgage are the best source for information about foreclosures before they begin.
Trustee sale
When a homeowner falls behind on three payments, the bank will record a notice of default against the property and if the owner fails to pay, the property is sold to the highest bidder at a trustee sale.
Disadvantages of buying foreclosures
The title needs to be checked before the purchase to avoid assuming a deficient title. If it is not possible to inspect the property before the sale, you won't know what is the property's condition.
Finding government-repossessed properties
The Department of Housing and Urban Development (HUD) acquires properties from lenders who foreclose on mortgages that it insures. These properties are then available for sale to potential homeowner-occupants and investors only through a licensed real estate broker.
The Department of Veterans Affairs (VA)
-acquires properties as a result of foreclosures on VA guaranteed loans. Then these properties are marketed through a property management services contract with a federal bank that lists them for sale with local real estate agents.
CONDOMINIUMS AND TOWNHOUSES
Condominiums are buildings in which persons individually own the air space inside the interior walls, floors and ceilings of their unit, but they jointly own an interest in the common areas that they share - such as the land, hallways, lobby, swimming pool, and parking lot.
The owner of a condominium is responsible for the mortgage and for a monthly association fee to the condominium association, to cover maintenance, repairs, and building insurance.
Condominiums most usual are apartments and they are especially popular among single homebuyers, and first-time buyers in high-priced housing markets if the cost of a single-family home cannot be afforded. They present a lifestyle with no yard work or exterior maintenance and repairs. Many condominium communities also offer amenities such as swimming pools, exercise rooms and tennis courts.
Condominiums as investments
They are a good way to enter into home ownership. The high price of single-family homes and the influx into the housing market of more single home buyers have made condominiums somewhat hot national investments especially because they have held their value as an investment despite economic downturns and problems with some associations.
Differences between condominiums and townhouses
Condominiums are usually apartments. A townhouse is attached to one or more houses and covers a vast range, from duplexes and triplexes to communities with hundreds of homes. The owners of townhouses own their homes and the land on which the houses are built. With condominiums, the condos’ owners jointly own the land and this common interest cannot be individually separated from the others. The exterior maintenance and repairs are very little, you do not have any neighbors above or below, like in an apartment and the homes being attached, you can enjoy a higher sense of security.
CO-OPS Cooperative apartments
People don't really own co-ops as real property, but they own shares of stock in the company that owns the building in which they live. Still, personal loans to invest in a co-op apartment are written similar to mortgages and the IRS treats co-op owners almost like real property owners. The interest paid on their apartment loans and on their portion of the municipal taxes and mortgage interest paid by the corporation can be deducted. Shareholders in a co-op are entitled to occupy specific units, use the common areas, and have a vote in the corporation. They pay a monthly fee that covers their share of operating expenses. The co-op is run by a board of directors, elected from among the residents. In addition to being able to take advantage of tax deductions, the National Association of Housing Cooperatives (NAHC) says that co-ops have low turnover rates, lower real estate tax assessments, reduced maintenance costs, resident participation and control, and the ability to prevent absentee and investor ownership.
VACATION HOMES
Vacation homes are being bought for investment, enjoyment, and retirement purposes. Mortgage interest and property taxes are deductible and if you are using your second home as a rental property, you can also depreciate it.
When you decide for such an investment, make sure that you can afford to pay two mortgages and pay the extra utilities and maintenance costs that follows.
Vacation home as an investment
Like any investment, it can be risky. Location and current market conditions are extremely important when deciding whether to buy.
Other things to consider: -Will you be able to afford repairs, maintenance, insurance, and utilities? What about fees to pay agents who rent the property for you? If you live several miles away from your vacation home, who will clean up between tenants and take an inventory of household items once the tenants leave? What if you are unable to rent your second home? Can your pocketbook withstand the strain of paying the mortgage?
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